Understanding credit scores and home-loan applications

Your credit score is one part of the information a lender may consider when assessing a home-loan application. It is based on information in your credit report, while each lender also applies its own policy and reviews your broader financial position.

What lenders may review

• Your repayment history and whether accounts have been paid on time.
• Current credit limits and debts, including credit cards and buy-now-pay-later facilities.
• Recent credit enquiries and applications.
• Defaults, serious credit infringements or other adverse information.
• Income, living expenses, savings, deposit and the proposed loan.

Habits that can help

• Pay bills and loan repayments by their due dates.
• Review your credit reports and ask the relevant credit-reporting body to correct genuine errors.
• Avoid unnecessary credit applications in the lead-up to a home-loan application.
• Reduce unused credit limits or debts where appropriate, while considering your overall needs.
• Speak with a broker early if there is something in your credit history you are concerned about.

A score is not the whole decision

A high credit score does not guarantee approval, and a lower score does not automatically mean every lender will decline an application. The reasons behind the score and the lender’s full assessment both matter. Preparing early gives you time to understand the position before making an offer on a property.